What is a USDA Loan? A USDA Loan is a mortgage loans that offers amazing benefits for individuals wishing to purchase a home in a rural area. USDA Home Loans are issued by private lenders but are guaranteed by the United Stated Department of Agriculture (USDA). USDA mortgage loans are here to provide affordable home ownership opportunities to low to moderate-income households located in rural USA. This product is setup to stimulate economic growth in rural areas and communicated thought the USA. Benefits of the USDA Loan
- USDA loans are $0 ZERO down payment Loans.
- Very competitive interest rates
- Lower monthly mortgage insurance factors those conventional loans
- Flexible credit requirements
- Ability to work with resident aliens
- Ability to purchase a home when you cant afford the 3.00% to 3.5% down payment with FHA and Conventional products.
- Sellers can contribute up to 6% your closing costs
- Millions of Americans are eligible
USDA Loan Eligibility To qualify for a USDA home loan the borrowers must meet the minimum credit and income requirements set forth by the USDA The basic requirements:
- Dependable income and ability to repay- may use social security, employment, annuities, retirement and self employment to qualify.
- US citizenship or permanent resident alien
- Must maintain an acceptable debt to income ratio to maintain ability to repay loan.
- The homebuyers income can not exceed the areas adjusted median income by more than 115%. You can check income limit guidelines here. https://eligibility.sc.egov.usda.gov/eligibility/incomeEligibilityAction.do?pageAction=state
- Have satisfactory credit without judgments, tax liens, or major adverse credit.
While the USDA itself doesn’t set a minimum credit score requirements we do require a minimum score of 640 to be able to use the automated underwriting system GUS, we can however manual underwrite files with lower scores on a case by case basis.
USDA Loan Property Eligibility Coverage Area The USDA defines a set rural area map. You can search any particular address to see if the property is in the designated USDA rural areas. For a USDA loan we must ensure its in a USDA lendable area. https://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do?pageAction=sfp